Business

The African Version of Amazon Will Emerge From Nigeria

When Amazon CEO Jeff Bezos announced the company's plans for 30-minute delivery drones with Amazon Prime Air in December, it became clear that ecommerce has exciting days ahead.

But Amazon isn't the only company ramping up digital business, nor is the U.S. the only region in the game. In fact, Africa may have already stolen a march on personal delivery from the air, and Nigeria — specifically the rapidly growing city of Lagos — may produce the next great ecommerce company.

Africa's tech space, which has been defined and accelerated by the mobile phone, is undoubtedly growing as investors scramble toward the continent. Various African countries have leapfrogged fixed-line Internet because of the ubiquity of cellphones and their networks, and entrepreneurs will likely tackle transportation in a similar way. Why build roads to inaccessible places when the air is a better and increasingly cheaper option?

A current initiative that addresses African drone delivery is the Flying Donkey Challenge, a 24-hour race around Mount Kenya where African companies have to deliver and collect 20-kilo payloads as they go. The winner receives a prize of more than $1 million.

But while these companies face huge challenges in circumnavigating Mount Kenya in East Africa, it's actually in Nigeria, West Africa, where today’s challenges are almost unfathomable in scope — and, yet, also where future "African Amazons" are likely to emerge.

Lagos isn't Nigeria’s capital city, but it is by far the biggest in the country. Depending on which statistics you believe, the city’s population is between 17 and 21 million, with 30,000 people arriving every week from across Africa.

Delivery in Lagos is utter chaos. There isn’t a viable postal service in the city — or the country, for that matter — and by all standards the city just shouldn’t work. But it does, and ecommerce companies are proliferating. Some even guarantee delivery of products across the city within 24 hours.

“By 2030, one in every six Africans will be Nigerians, and its economy will have the largest GDP on the continent," says Betty Enyonam Kumahor, managing director of Africa for global IT consulting firm ThoughtWorks. "But understanding how to launch an ecommerce business in Nigeria requires an understanding of the ecosystem and country, and other aspects such as the cost of generators and the relative dearth of the talent pool."

But ecommerce startups in Lagos, such as online grocery business Gloo.ng, are facing logistic problems beyond buying generators. There's also the problems of trying to get through Lagos’ terrible traffic and finding addresses that often cannot be found on a map, for example.

Gloo.ng's founder, Dr. Olumide Olusanya, is positioning the company as Nigeria’s equivalent of Ocado, the very successful UK delivery arm of Waitrose supermarket. Olusanya gave up practicing medicine to become an entrepreneur, and Gloo.ng has expanded rapidly in its short history. It has quadrupled in size in the past year, and in January moved to a 20,000 square feet fulfillment center in the city.

“We believe the timing of starting our company has been God-sent," he says. "Brick-and-mortar supermarket shopping, which is exceedingly painful on this side of the world, is not yet culturally ingrained, and we will leapfrog the curve of building supermarket brick-and-mortar, as you have in the developed climes where this is an embedded culture."

According to Olusanya, the two biggest brick-and-mortar players have a combined market share of 0.9%, with fewer than 13 outlets in a nation of 170 million people — a significant portion of whom are migrating to the middle class.

"The fact that 65% of first-time users become repeat shoppers with us is proof that we are on to something huge,” Olusanya says.

Ecommerce innovation isn't limited to Nigeria, but entrepreneurs around the world are closely watching what is happening there. One such UK entrepreneur is Ivan Mazour, CEO of Ometria, a software company providing an ecommerce intelligence platform to retailers.

"Ecommerce is the next frontier for emerging markets — an unstoppable wave in the evolution of retail," he says. "The MINT countries [Mexico, Indonesia, Nigeria and Turkey] are the future, and Nigeria is the most interesting of this new group. As an economy, it's projected to go from the 39th largest GDP to 13th in the next two decades."

More importantly, Mazour adds, Nigeria is already home to many successful ecommerce giants, including Konga and Jumia, two Nigerian ecommerce companies that have raised $63.5 million and $61 million respectively from global investors. These two companies provide the inspiration for African entrepreneurs, such as Gloo.ng’s Olusanya, as well as other more niche ecommerce companies to create Africa’s first retail hub or cluster in Lagos.

“[Ometria was] founded with a focus on bridging the gap between the knowledge that exists in developed markets. As we continue to expand globally, we are looking to Nigeria as a future ecommerce leader in the EMEA [Europe, Middle East and Africa] region,” Mazour says.

There's also a wealth of exciting startups such as QSR Consult, a company that is developing three new "quick service" restaurants Grubs, Spice Bowl and Kobis in Nigeria. Tunde Ogunrinde, the company's CEO, spent 17 years at Burger King UK and returned to Nigeria in 2009.

“There is a greater comfort with shopping online with many Nigerians nowadays due to pricing and non-payment until goods are delivered at the door of client," Ogunrinde says. "It seems that Jumia [and] Konga are leading the market in terms of brand awareness and potential volumes. As confidence grows, this form of buying and selling will increase, but for many of these ecommerce companies, the biggest challenge is logistics and getting products to clients on time."

So, while Bezos dreams of drones and talks hot air, and while some African companies clamber to join the race to Mount Kenya for the Flying Donkey Challenge, it's Nigerian ecommerce startups that are doing it right now.

Moreover, they are finding quick success in one of the most competitive cities in the world. We'll see drones over Lagos sooner than we think, and probably a lot sooner than the cities in the West.

Mashable
is a global, multi-platform media and entertainment company. Powered by its own proprietary technology, Mashable is the go-to source for tech, digital culture and entertainment content for its dedicated and influential audience around the globe.